For those of you who don’t know, a derivative is an instrument of finance the price of whom is governed by underlying stocks, bonds etc. People tend to make tremendous amounts of profit by trading derivatives over the counter and or on exchanges. However, this is only achieved by the personnel who are familiar with the concepts of derivative trade and have a deep understanding of the same.
If you are also looking to gain insights on derivative trading or are a professional trader willing to polish their skills, below is the list of top 4 derivative books which will give you a good insight into the derivative trade.
Introduction to Futures and Options Market
For those who are completely new to the concept of derivative trading, Introduction to Futures and Options Market, written by John Hull is the best derivative book you should buy. The book covers and explains the complicated terminologies associated with derivative trading in simple easy to understand manner, and would be an excellent read for someone who is from the mathematics domain. The book explains ways of assessing a derivative trade as well as analysing the risk associated with same. In totality, the book is a one stop guide to understanding the fundamentals of derivative trade.
Merton Miller On Derivatives
Written by Merton Miller, an expert financial analyst and trader, this book aside from explaining the concepts of derivative trading, is focussed towards tackling problems faced by traders and quants. This derivative trading book demystifies complicated and hidden concepts of future, options and other forms of derivative trade while at the same time addressing the trading errors which caused severe losses for companies like Procter and Gamble, Baring Bank etc. The noble prize winner economist rests his case by showing how derivative trading can help tackle past the financial risk.
All About Derivatives
Similar to the first book we mentioned in the series, All About Derivatives is one of the few books which explains the concepts of derivative trade in great detail. This derivative trading book aside from talking about various kinds of derivative trade, explains concepts like settlement, valuation etc. from a perspective that even a beginner can understand. After making readers comfortable with the topic the author switches to advanced concepts like financial model evaluation and pricing methods which require readers to possess knowledge of basic mathematics.
Derivatives Demystified
This book written as a part of the Wiley Finance series is a comprehensive guide to derivative trading and is focussed on helping people understand derivative trade without too much focus on technicalities. The derivative trading book further helps the readers understand, the application of derivative trade and how various models of the same can help in risk identification and mitigation, thereby saving companies from huge losses. The author towards the end concludes by explaining the credit crisis of the year 2009 and how the new regulatory framework is shaping the future of the derivative market.
So, these were the top 4 best derivative books which can help you gain a deeper understanding of the concepts of trading options, futures etc. If you think there is some other great derivative trading book we missed, don’t forget to mention the name of the same in the comment section below.
